BEIJING, July 13 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, believes the fertilizer market will improve.
Through excess production capacity, Chinese meteorological disasters, poor demand, poor international market conditions and many other factors, the first half of the overall operation of China's fertilizer market experienced a downturn. Now Himfr predicts the following for the fertilizer market in the second half-year:
Tariff Changes
From July 1, the fertilizer export tax adjusted to 7% for off-season tariffs, which opened the export channel for the Chinese fertilizer. Recent international fertilizer market conditions have also hit the bottom, but there appears to be warming momentum. Last week, for small particles of urea FOB the price was 232-235 U.S. dollars per ton, rising about 9 or 10 dollars; the Chinese FOB price of urea granules was 245-250 U.S. dollars per ton, which was up two U.S. dollars. Exports have increased manoeuvrability, which will ease the pressure on the Chinese fertilizer market, and play a positive role. In the second half of 2010, only the September 16-October 15 period will see the tariff peak season, while other times are all off-season tariffs; the tariff policy in the relaxed environment of the first half of 2010 has been good for the Chinese fertilizer market.
Increased Cost Pressure
Effective June 1, natural gas prices rose 0.23 yuan per cubic meter, together with a pipeline transportation increase of 10%. Some companies will actually increase from 0.4 yuan/cubic meter, while urea manufacturers' costs increased 180 to 280 yuan. In addition, the possible implementation of the second half of the third round of coal linkage, fertilizer cost pressure will only rise. The pressure of increased costs is rigid, and sooner or later eventually will be reflected in the prices of the products.
Market Bottomed Out
Considering the cost change, the actual the prices are much lower than during the 2008 financial crisis and during the first half of 2009; the majority of nitrogen fertilizer businesses experienced losses. According to statistics, in May China's urea output was 5.2 million tons, down 1.8%, year-on-year down 10.5%. Monthly urea production declined, which indicates that in the face of high costs, fertilizer companies began reducing production to defend their bottom lines.
Demand is Expected to Rise
In recent years, agricultural product prices have soared, and the fertilizer input-output ratio has increased significantly. Though farmers are optimistic about the agricultural income, they are not reducing fertilizer input. However, affected by weather and other factors, fertilizer demand has been weak for the entire first half of the year, even in the spring season when it's not busy; so demand will certainly persist in the second half-year. Himfr expects that fertilizer demand will be greater than in the same period of previous years, and compared with the first half, it also should improve.
Although the fertilizer market in the second half may improve, excess capacity is serious, and inventory remains high, so expecting an immediate market price reversal is unrealistic. Himfr expects that the fertilizer market will become stable in August.
About Himfr.com
Himfr.com is a promising e-commerce company and a leading vertical search engine company in China. Himfr.com offers a variety of high quality products such as furniture casters (http://www.himfr.com/buy-furniture_casters/ ), strapping machines (http://www.himfr.com/buy-machine_strapping/ ), oil radiator heaters (http://www.himfr.com/buy-oil_radiator_heater/ ) and many more.
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SOURCE Himfr.com
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